SiteOne Landscape Supply Inc

Previous wording

We are the largest and only national full product line wholesale distributor of landscape supplies in the United States and have a growing presence in Canada. Our customers are primarily residential and commercial landscape professionals who specialize in the design, installation, and maintenance of lawns, gardens, golf courses, and other outdoor spaces. As of December 31, 2023, we had over 690 branch locations in 45 U.S. states and six Canadian provinces. Through our expansive North American network, we offer a comprehensive selection of approximately 160,000 SKUs, including irrigation supplies, fertilizer and control products (e.g., herbicides), hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ice melt products to green industry professionals. We also provide value-added consultative services to complement our product offerings and to help our customers operate and grow their businesses.

Current wording

We are the largest and only national full product line wholesale distributor of landscape supplies in the United States and have a growing presence in Canada. Our customers are primarily residential and commercial landscape professionals who specialize in the design, installation, and maintenance of lawns, gardens, golf courses, and other outdoor spaces. As of December 29, 2024, we had over 690 branch locations in 45 U.S. states and six Canadian provinces. Through our expansive North American network, we offer a comprehensive selection of approximately 170,000 SKUs, including irrigation supplies, fertilizer and control products (e.g., herbicides), hardscapes (including pavers, natural stone, and blocks), landscape accessories, nursery goods, outdoor lighting, and ice melt products to green industry professionals. We also provide value-added consultative services to complement our product offerings and to help our customers operate and grow their businesses.

Previous wording

Looking forward, the trend of consumers spending more time at home and investing in their outdoor living spaces is expected to continue, although at lower levels compared to the three-year pandemic peak. Increases in home values, lack of affordable new homes, and elevated mortgage interest rates for prolonged periods have resulted in homeowners staying in their homes longer. The long-term outlook for the landscape supply industry remains strong however, driven by favorable population trends, housing demand, and increased interest in outdoor living. We are confident in the landscape supply industry growth opportunities and our ability to continue providing our customers, suppliers, and shareholders exceptional value. We are the only national full product line wholesale distributor of landscape supplies in the United States. With a robust acquisition pipeline and a flexible business model, we remain committed to our strategic and operational initiatives and will continue to focus on driving growth organically and through acquisitions while gaining market share and delivering margin expansion by leveraging our scale, resources, and capabilities. We are operational in four distribution center facilities across the United States that expanded our supply chain capacity in 2023. Our West distribution center operations transitioned from Colton, California (179,000 square feet) to Goodyear, Arizona (392,000 square feet) in April 2023. We operate three other distribution centers that are located in Hutchins, Texas (338,000 square feet), Palmetto, Georgia (335,000 square feet), and Carlisle, Pennsylvania (201,000 square feet). In addition, we achieved strong operating cash flows in the 2023 Fiscal Year through effective working capital management due primarily to our progress in reducing inventory levels which were elevated in response to supply chain uncertainty in the prior year.

Current wording

Looking forward, the trend of consumers spending more time at home and investing in their outdoor living spaces is expected to continue, although at lower levels compared to the three-year pandemic peak. Increases in home values, lack of affordable new homes, and elevated mortgage interest rates for prolonged periods have resulted in homeowners staying in their homes for longer periods. However, the long-term outlook for the landscape supply industry remains strong, driven by favorable population trends, housing demand, and continued interest in outdoor living. We remain confident in the landscape supply industry growth opportunities and our ability to continue providing our customers, suppliers, and shareholders with exceptional value. We are the only national full product line wholesale distributor of landscape supplies in the United States. With a robust acquisition pipeline and a flexible business model, we remain committed to our strategic and operational initiatives and will continue to focus on driving growth organically and through acquisitions while gaining market share and delivering margin expansion by leveraging our scale, resources, and capabilities. Looking ahead to the 2025 Fiscal Year, the rate of commodity price deflation is expected to moderate as declines in PVC pipe and grass seed are anticipated to be offset by modest price increases collectively across our other products. In addition, our balanced end market mix, broad product portfolio, geographic coverage, and commercial and operational initiatives provide us with multiple opportunities to achieve growth and position us to be resilient in softer markets.

Previous wording

As we continue to navigate through the current uncertainty presented by market and economic conditions, we believe that we are prepared to meet the challenges ahead due to our balanced business, strong financial condition, dedicated and experienced teams, and focused business strategy. We continue to closely monitor the impact on our business and the related uncertainties and risks of moderating prices and demand weakness resulting from the challenging market conditions described above as well as the potential effects of uncertain political conditions and geopolitical conflicts, such as the ongoing war in Ukraine, the conflict in the Gaza Strip, and unrest in the Middle East. These conditions are beyond our control, and we cannot estimate with certainty the full extent of their impact on our business, results of operations, cash flows, and/or financial condition. To mitigate the effects of these conditions, we may take actions that alter our business operations if required or that we determine are in the best interests of our associates, customers, suppliers, and shareholders. The forward-looking statements in this Business Environment and Trends section are subject to significant risks and uncertainties. See Part I, Item 1A. - “Risk Factors”, for a discussion of the various risks that could have a material adverse effect on our reputation, business, financial position, results of operations, and cash flows.

Current wording

As we continue to navigate through the current uncertainty presented by market and economic conditions, we believe that we are prepared to meet the challenges ahead due to our well-balanced business, strong financial condition, dedicated and experienced teams, and focused business strategy. Our balance sheet and liquidity position provide the flexibility to operate effectively and execute our growth strategy, as well as complete share repurchases through the evolving market conditions. We continue to closely monitor the impact on our business and the related risks and uncertainties of interest rate changes, tariffs, and labor market conditions and workforce availability, as well as declining commodity prices and softer markets and the potential effects of uncertain political conditions and geopolitical conflicts. These conditions are beyond our control, and we cannot estimate with certainty the full extent of their impact on our business, results of operations, cash flows, and/or financial condition. To mitigate the effects of these conditions, we may take actions that alter our business operations if required or that we determine are in the best interests of our associates, customers, suppliers, and shareholders. The forward-looking statements in this Business Environment and Trends section are subject to significant risks and uncertainties. See Part I, Item 1A. - “Risk Factors”, for a discussion of the various risks that could have a material adverse effect on our reputation, business, financial position, results of operations, and cash flows.

Previous wording

We manage our business as a single reportable segment. Within our organizational framework, the same operational resources support multiple geographic regions, and performance is evaluated at a consolidated level. We also evaluate performance based on discrete financial information on a regional basis. Since all of our regions have similar operations and share similar economic characteristics, we aggregate regions into a single operating and reportable segment. These similarities include (i) long-term financial performance, (ii) the nature of products and services, (iii) the types of customers we sell to, and (iv) the distribution methods utilized. Further, all of our product categories have similar supply chain processes and classes of customers.

Current wording

We manage our business as a single reportable segment. Within our organizational framework, the same operational resources support multiple geographic regions, and performance is evaluated at a consolidated level. Each of our regions has similar operations and economic characteristics such as the nature of products and services, the types of customers we sell to, and the distribution methods utilized. In addition, our product categories have similar supply chain processes and classes of customers.

Previous wording

Cost of goods sold. Our Cost of goods sold includes all inventory costs, such as the purchase price paid to suppliers, net of any volume-based incentives, as well as inbound freight and handling, and other costs associated with inventory. Cost of goods sold also includes salaries, wages, employee benefits, payroll taxes, bonuses, depreciation, and amortization related to inventory production activities. Our Cost of goods sold excludes the cost to deliver the products to our customers through our branches, which is included in Selling, general and administrative expenses. Cost of goods sold is recognized primarily using the first-in, first-out method of accounting for the inventory sold.

Current wording

Cost of goods sold. Our Cost of goods sold includes all inventory costs, such as the purchase price paid to suppliers, net of any volume-based incentives and discounts, as well as inbound freight and handling, and other costs associated with inventory. Cost of goods sold also includes salaries, wages, employee benefits, payroll taxes, bonuses, depreciation, and amortization related to inventory production activities. Our Cost of goods sold excludes the cost to deliver the products to our customers through our branches, which is included in Selling, general and administrative expenses. Cost of goods sold is recognized primarily using the first-in, first-out method of accounting for the inventory sold.

Previous wording

Selling, general and administrative expenses (operating expenses). Our operating expenses are primarily comprised of Selling, general and administrative costs, which include personnel expenses (salaries, wages, employee benefits, payroll taxes, stock-based compensation, and bonuses), rent, fuel, vehicle maintenance costs, insurance, utilities, repairs and maintenance, and professional fees. Operating expenses also include depreciation and amortization.

Current wording

Selling, general and administrative expenses (operating expenses). Our operating expenses are primarily comprised of Selling, general and administrative costs, which include compensation expenses (salaries, wages, employee benefits, payroll taxes, stock-based compensation, and bonuses), rent and facility related expenses, fleet and delivery related expenses including fuel costs, information technology, marketing, insurance, and repairs and maintenance expenses, as well as credit card processing and professional fees. Operating expenses also include depreciation and amortization.

Previous wording

Non-GAAP Adjusted EBITDA. In addition to the metrics discussed above, we believe that Adjusted EBITDA is useful for evaluating the operating performance and efficiency of our business. EBITDA represents our Net income (loss) plus the sum of income tax (benefit) expense, interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases not in the ordinary course of business, financing fees, as well as other fees and expenses related to acquisitions, and other non-recurring (income) loss. Refer to “Results of Operations – Quarterly Results of Operations Data” for more information regarding how we calculate EBITDA and Adjusted EBITDA and the limitations of those metrics.

Current wording

Non-GAAP Adjusted EBITDA. In addition to the metrics discussed above, we believe that Adjusted EBITDA is useful for evaluating the operating performance and efficiency of our business. EBITDA represents consolidated Net income (loss) plus the sum of income tax expense (benefit), interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA represents EBITDA as further adjusted for items such as stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases not in the ordinary course of business, financing fees, as well as other fees and expenses related to acquisitions, and other non-recurring (income) loss. Adjusted EBITDA includes Adjusted EBITDA attributable to non-controlling interest. Refer to “Results of Operations – Quarterly Results of Operations Data” for more information regarding how we calculate EBITDA and Adjusted EBITDA and the limitations of those metrics.

Previous wording

Our business depends on demand from customers for landscape products and services. The landscape supply industry includes a significant amount of landscape products, such as irrigation systems, outdoor lighting, lawn care supplies, nursery goods, and landscape accessories, for use in the construction of newly built homes, commercial buildings and facilities, and recreational spaces. The landscape supply industry has historically grown in line with rates of growth in residential housing and commercial building. The industry is also affected by trends in home prices, mortgage interest rates, home sales, and consumer spending. As general economic conditions improve or deteriorate, consumption of these products and services also tends to fluctuate. The landscape supply industry also includes a significant amount of agronomic products such as fertilizer, herbicides, and ice melt for use in maintaining existing landscapes or facilities. The use of these products is also tied to general economic activity, but levels of sales are not as closely correlated to construction markets.

Current wording

Our business depends on demand from customers for landscape products and services. The landscape supply industry includes a significant amount of landscape products, such as irrigation systems, outdoor lighting, lawn care supplies, nursery goods, and landscape accessories, for use in the construction of newly built homes, commercial buildings and facilities, and recreational spaces. The landscape supply industry has historically grown in line with rates of growth in residential housing and commercial building. The industry is also affected by trends in home prices, mortgage interest rates, home sales, and consumer spending. As general economic conditions improve or deteriorate, consumption of these products and services also tends to fluctuate. The landscape supply industry also includes a significant number of agronomic products such as fertilizer, herbicides, and ice melt for use in maintaining existing landscapes or facilities. The use of these products is also tied to general economic activity, but levels of sales are not as closely correlated to construction markets.

Previous wording

Preferences in housing, lifestyle, and environmental awareness can also impact the overall level of demand and mix for the products we offer. Examples of current trends we believe are important to our business include an ongoing interest in professional landscape services inspired by the popularity of home and garden television shows, magazines, and social media, the increasingly popular concept of “outdoor living,” which has been a key driver of sales growth for our hardscapes and outdoor lighting products, and the social focus on eco-friendly products that promote water conservation, energy efficiency, and the adoption of “green” standards.

Current wording

Preferences in housing, lifestyle, and environmental awareness can also have an impact on the overall level of demand and mix for the products we offer. Examples of current trends we believe are important to our business include an ongoing interest in professional landscape services inspired by the popularity of home and garden television shows, magazines, and social media, the increasingly popular “outdoor living” trend, which has been a key driver of sales growth for our hardscapes and outdoor lighting products, and the social focus on eco-friendly products that promote water conservation, energy efficiency, and the adoption of “green” standards.

Previous wording

In addition to our organic growth, we continue to grow our business through acquisitions in an effort to better service our existing customers and to attract new customers. These acquisitions have allowed us to further broaden our product lines and extend our geographic reach and leadership positions in local markets. In accordance with GAAP, the results of the acquisitions are reflected in our financial statements from the date of acquisition forward. Additionally, we incur transaction costs in connection with identifying and completing acquisitions as well as ongoing costs as we integrate acquired companies and seek to achieve synergies. As of December 31, 2023, we have invested $444.4 million in 27 acquisitions since the start of the 2022 Fiscal Year. The following is a summary of the acquisitions completed during the 2023 Fiscal Year and the 2022 Fiscal Year:

Current wording

In addition to our organic growth, we continue to grow our business through acquisitions in an effort to better service our existing customers and to attract new customers. These acquisitions have allowed us to further broaden our product lines and extend our geographic reach and leadership positions in local markets. In accordance with GAAP, the results of the acquisitions are reflected in our financial statements from the date of acquisition forward. Additionally, we incur transaction costs in connection with identifying and completing acquisitions as well as ongoing costs as we integrate acquired businesses and seek to achieve synergies. As of

Previous wording

•In December 2022, we acquired the assets and assumed the liabilities of Telluride Natural Stone, Inc. (“Telluride Natural Stone”). With one location in Phoenix, Arizona, Telluride Natural Stone is a wholesale distributor of hardscape products and landscape supplies to landscape professionals.

Current wording

•In December 2024, we acquired the assets and assumed the liabilities of Custom Stone. With six locations across Texas, Custom Stone is a wholesale distributor of hardscape products to landscape professionals.

Previous wording

•In August 2022, we acquired the assets and assumed the liabilities of Kaknes Landscape Supply, Inc. (“Kaknes”). With one location in Naperville, Illinois, Kaknes is a wholesale distributor of nursery products to landscape professionals.

Current wording

•In December 2024, we acquired the assets and assumed the liabilities of OakStreet Wholesale Nursery, LLC (“OakStreet”). With one location in Fairview, Texas, OakStreet is a wholesale distributor of nursery products to landscape professionals.

Previous wording

We generally procure our products through purchase orders rather than under long-term contracts with firm commitments. We work to develop strong relationships with select suppliers that we target based on a number of factors, including brand and market recognition, price, quality, product support, service levels, delivery terms, and strategic positioning. We typically have annual supplier agreements, and while they generally do not provide for specific product pricing, many include volume-based financial incentives that we earn by meeting or exceeding purchase volume targets. Our ability to earn these volume-based incentives is an important factor in our financial results. In certain cases, we enter into supply contracts with terms that exceed one year for the manufacture of our LESCO® branded fertilizer, some nursery goods, grass seed, and landscape supply products, which may require us to purchase products in the future.

Current wording

We generally procure our products through purchase orders rather than under long-term contracts with firm commitments. We work to develop strong relationships with select suppliers that we target based on a number of factors, including brand and market recognition, price, quality, product support, service levels, delivery terms, and strategic positioning. We typically have annual supplier agreements, and while they generally do not provide specific product pricing, many include volume-based financial incentives that we earn by meeting or exceeding purchase volume targets. Our ability to earn these volume-based incentives is an important factor in our financial results. In certain cases, we enter into supply contracts with terms that exceed one year for the manufacture of our LESCO® branded fertilizer, some nursery goods, grass seed, and hardscapes, which may require us to purchase products in the future.

Previous wording

We continue to undertake initiatives, utilizing our scale to improve our profitability, enhance supply chain efficiency, strengthen our pricing and category management capabilities, streamline and refine our marketing process, and invest in more sophisticated information technology systems and data analytics. We are focusing on our procurement and supply chain management initiatives to better serve our customers and reduce sourcing costs. We are also implementing new inventory planning and stocking system functionalities and new transportation management systems in an effort to reduce costs as well as improve our reliability and level of service. In addition, we continue to enhance our website and B2B e-Commerce platform. We also work closely with our local branches to improve sales, delivery, and branch productivity. We believe we will continue to benefit from the following initiatives, among others:

Current wording

We continue to undertake initiatives, utilizing our scale to improve our profitability, enhance supply chain efficiency, strengthen our pricing and category management capabilities, streamline and refine our marketing process, and invest in more sophisticated information technology systems and data analytics. We remain focused on our procurement and supply chain management initiatives to better serve our customers and reduce sourcing costs. We continue to implement new inventory planning, stocking, and transportation management system functionalities in an effort to reduce costs as well as improve our reliability and level of service. In addition, we continue to enhance our website and B2B e-Commerce platform. We also work closely with our local branches to improve sales, delivery, and branch productivity. We believe we will continue to benefit from the following initiatives, among others:

Previous wording

•Supply chain initiatives, including the implementation of new inventory planning and stocking systems and functionalities, the continued expansion of our distribution network footprint and capabilities, local hubs in large markets, inbound freight optimization, and local fleet utilization and cost improvements.

Current wording

•Supply chain initiatives, including the implementation of new inventory planning and stocking system functionalities, the continued expansion of our distribution network footprint and capabilities, local hubs in large markets, inbound freight optimization, and local fleet utilization and cost improvements.

Previous wording

•Marketing initiatives, including customer analytics and lifecycle marketing, product marketing, Hispanic customer engagement, optimization of our digital marketing strategy, and a continued focus on the new Partners Program.

Current wording

•Marketing initiatives, including customer analytics and lifecycle marketing, product marketing, Hispanic customer engagement, optimization of our digital marketing strategy, and a continued focus on our Partners Program.

Previous wording

Net sales for the 2023 Fiscal Year increased 7% to $4,301.2 million as compared to $4,014.5 million for the 2022 Fiscal Year primarily due to contributions from acquisitions. Organic Daily Sales for the 2023 Fiscal Year were flat compared to the 2022 Fiscal Year due to moderating economic conditions in our end markets. Based upon year-over-year price changes in our highest selling SKUs, we estimate price deflation reduced Organic Daily Sales by less than 1% in the 2023 Fiscal Year. Organic Daily Sales for agronomic products (fertilizer, control products, ice melt, equipment, and other products) decreased 4% due primarily to lower prices for fertilizer and grass seed, partially offset by increased volume for those products. Organic Daily Sales for landscaping products (irrigation supplies, hardscapes, landscape accessories, nursery goods, and outdoor lighting) grew 1% reflecting modest end market demand and slightly higher prices. Acquisitions contributed $278.7 million, or 7%, to Net sales growth for the 2023 Fiscal Year.

Current wording

Net sales for the 2024 Fiscal Year increased 6% to $4,540.6 million as compared to $4,301.2 million for the 2023 Fiscal Year primarily due to contributions from acquisitions. Organic Daily Sales for the 2024 Fiscal Year decreased 1% compared to the 2023 Fiscal Year primarily due to commodity price deflation. Based upon year-over-year price changes in our highest selling SKUs, we estimate price deflation reduced Organic Daily Sales by 3% in the 2024 Fiscal Year. Organic Daily Sales for agronomic products (fertilizer, control products, ice melt, equipment, and other products) increased 4% primarily due to strong volume growth resulting from lower prices and solid end market demand. Organic Daily Sales for landscaping products (irrigation supplies, hardscapes, landscape accessories, nursery goods, and outdoor lighting) decreased 3% reflecting price deflation and weaker demand in the repair and remodel end market. Acquisitions contributed $286.0 million, or 7%, to Net sales growth for the 2024 Fiscal Year.

Previous wording

Cost of goods sold for the 2023 Fiscal Year increased 8% to $2,810.0 million from $2,593.0 million for the 2022 Fiscal Year. The increase in Cost of goods sold was primarily attributable to acquisitions.

Current wording

Cost of goods sold for the 2024 Fiscal Year increased 6% to $2,980.5 million from $2,810.0 million for the 2023 Fiscal Year. The increase in Cost of goods sold, including Inventory costs, net of supplier incentives and discounts, Freight, handling, and distribution expenses, and Other Cost of goods sold was primarily attributable to acquisitions.

Previous wording

Gross profit for the 2023 Fiscal Year increased 5% to $1,491.2 million as compared to $1,421.5 million for the 2022 Fiscal Year. Gross profit growth was driven by Net sales growth, including acquisitions. Gross margin decreased 70 basis points to 34.7% for the 2023 Fiscal Year as compared to 35.4% for the 2022 Fiscal Year. The decrease in gross margin primarily reflects the absence of the price realization benefit recognized in the 2022 Fiscal Year, partially offset by contributions from acquisitions with higher gross margins as well as lower freight costs.

Current wording

Gross profit for the 2024 Fiscal Year increased 5% to $1,560.1 million as compared to $1,491.2 million for the 2023 Fiscal Year. Gross profit growth was driven by Net sales growth, including acquisitions. Gross margin decreased 30 basis points to 34.4% for the 2024 Fiscal Year as compared to 34.7% for the 2023 Fiscal Year. The decrease in gross margin primarily reflects lower price realization, partially offset by contributions from acquisitions with higher gross margins.

Previous wording

Selling, general and administrative expenses (“SG&A”) for the 2023 Fiscal Year increased 15% to $1,256.6 million from $1,097.0 million for the 2022 Fiscal Year. SG&A as a percentage of Net sales increased 190 basis points to 29.2% for the 2023 Fiscal Year compared to 27.3% for the 2022 Fiscal Year. This increase was primarily due to the impact of acquisitions and operating cost inflation. Depreciation and amortization increased $23.9 million to $127.7 million due to our acquisitions.

Current wording

SG&A for the 2024 Fiscal Year increased 10% to $1,385.1 million from $1,256.6 million for the 2023 Fiscal Year. SG&A as a percentage of Net sales increased 130 basis points to 30.5% for the 2024 Fiscal Year compared to 29.2% for the 2023 Fiscal Year. The increase in SG&A, including Compensation, Facility, Depreciation and amortization, Delivery, and Other Selling, general, and administrative expenses was primarily due to the impact of acquisitions with higher operating costs. Facility expenses also increased as a result of the consolidations and closures of certain branches and other locations in the fourth quarter of 2024.

Previous wording

Interest and other non-operating expense, net increased 36% to $27.1 million in the 2023 Fiscal Year from $20.0 million in the 2022 Fiscal Year. The increase in interest expense was primarily due to increased borrowings and a higher average interest rate during the 2023 Fiscal Year as compared to the 2022 Fiscal Year.

Current wording

Interest and other non-operating expense, net increased 18% to $31.9 million for the 2024 Fiscal Year from $27.1 million for the 2023 Fiscal Year. The increase in interest expense was primarily due to higher average borrowings and the Loss on extinguishment of debt of $1.8 million recognized during the 2024 Fiscal Year as compared to the 2023 Fiscal Year.

Previous wording

Income tax expense was $49.8 million for the 2023 Fiscal Year as compared to $67.7 million for the 2022 Fiscal Year. The effective tax rate was 22.3% for the 2023 Fiscal Year as compared to 21.6% for the 2022 Fiscal Year. The increase in the effective tax rate was due primarily to a decrease in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Consolidated Statements of Operations. Excess tax benefits of $5.9 million were recognized for the 2023 Fiscal Year as compared to $10.4 million for the 2022 Fiscal Year.

Current wording

Income tax expense was $36.0 million for the 2024 Fiscal Year as compared to $49.8 million for the 2023 Fiscal Year. The effective tax rate was 22.4% for the 2024 Fiscal Year as compared to 22.3% for the 2023 Fiscal Year. The increase in the effective tax rate was due primarily to a decrease in the amount of excess tax benefits from stock-based compensation recognized as a component of Income tax expense in the Consolidated Statements of Operations. Excess tax benefits of $3.3 million were recognized for the 2024 Fiscal Year as compared to $5.9 million for the 2023 Fiscal Year.

Previous wording

Net income for the 2023 Fiscal Year decreased 29% to $173.4 million as compared to $245.4 million for the 2022 Fiscal Year. The decrease in Net income was primarily due to lower gross margin and higher SG&A, partially offset by an increase in Net sales.

Current wording

Net income attributable to SiteOne for the 2024 Fiscal Year decreased 29% to $123.6 million as compared to $173.4 million for the 2023 Fiscal Year. The decrease in Net income was primarily due to the negative impact of commodity product deflation and lower price realization.

Previous wording

The following tables set forth certain financial data for each of the most recent eight fiscal quarters including our unaudited Net sales, Cost of goods sold, Gross profit, Selling, general and administrative expenses, Net income (loss), and Adjusted EBITDA data (including a reconciliation of Adjusted EBITDA to Net income (loss)). We have prepared the quarterly data on a basis that is consistent with the financial statements included in this Annual Report on Form 10-K. In the opinion of management, the financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data. This information is not a complete set of financial statements and should be read in conjunction with our financial statements and related notes included in this Annual Report on Form 10-K. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.

Current wording

The following table sets forth certain financial data for each of the most recent eight fiscal quarters including our unaudited Net sales, Cost of goods sold, Gross profit, Selling, general and administrative expenses, Net income (loss), and Adjusted EBITDA data (including a reconciliation of Adjusted EBITDA to Net income (loss)). We have prepared the quarterly data on a basis that is consistent with the financial statements included in this Annual Report on Form 10-K. In the opinion of management, the financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data. This information is not a complete set of financial statements and should be read in conjunction with our financial statements and related notes included in this Annual Report on Form 10-K. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.

Previous wording

(a) In addition to our Net income (loss) determined in accordance with GAAP, we present Adjusted EBITDA in this Annual Report on Form 10-K to evaluate the operating performance and efficiency of our business. EBITDA represents our Net income (loss) plus the sum of Income tax expense (benefit), interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA is further adjusted for stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases not in the ordinary course of business, financing fees, as well as other fees and expenses related to acquisitions, and other non-recurring (income) loss. We believe that Adjusted EBITDA is an important supplemental measure of operating performance because:

Current wording

(a) In addition to our Net income (loss) determined in accordance with GAAP, we present Adjusted EBITDA in this Annual Report on Form 10-K to evaluate the operating performance and efficiency of our business. EBITDA represents Net income (loss) plus the sum of Income tax expense (benefit), interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA is further adjusted for stock-based compensation expense, (gain) loss on sale of assets and termination of finance leases not in the ordinary course of business, financing fees, as well as other fees and expenses related to acquisitions, and other non-recurring (income) loss. We believe that Adjusted EBITDA is an important supplemental measure of operating performance because:

Previous wording

•does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and

Current wording

•does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

Previous wording

(d) Represents professional fees, retention and severance payments, and performance bonuses related to historical acquisitions. Although we have incurred professional fees, retention and severance payments, and performance bonuses related to acquisitions in several historical periods and expect to incur such fees and payments for any future acquisitions, we cannot predict the timing or amount of any such fees or payments. These amounts are recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations.

Current wording

(d) Represents professional fees and settlement of litigation, performance bonuses, and retention and severance payments related to historical acquisitions. Also included is the cost of inventory that was stepped up to fair value during the second quarter of 2024 related to the purchase accounting of Devil Mountain and charges during the fourth quarter of 2024 for consolidating or closing certain Pioneer locations. We cannot predict the timing or amount of any such fees or payments. These amounts are recorded in Cost of goods sold and Selling, general and administrative expenses in the Consolidated Statements of Operations.

Previous wording

(e) Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented.

Current wording

(e) Adjusted EBITDA excludes any earnings or loss of acquisitions prior to their respective acquisition dates for all periods presented. Adjusted EBITDA includes Adjusted EBITDA attributable to non-controlling interest of $2.5 million for the 2024 Fiscal Year, and $0.8 million, $0.8 million, and $0.9 million for the fourth, third, and second quarter of 2024, respectively.

Previous wording

In October 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of our common stock. We intend to purchase shares under the repurchase authorization from time to time on the open market at the discretion of management, subject to strategic considerations, market conditions, and other factors. The share repurchase authorization does not have an expiration date and may be amended, suspended, or terminated by our Board of Directors at any time. During the 2023 Fiscal Year, we repurchased 90,000 shares of our common stock at an average price per share of $126.21. As of December 31, 2023, the dollar value of shares that may yet be purchased under the share repurchase authorization was $363.6 million.

Current wording

In October 2022, our Board of Directors approved a share repurchase authorization for up to $400.0 million of our common stock. We intend to purchase shares under the repurchase authorization from time to time on the open market at the discretion of management, subject to strategic considerations, market conditions, and other factors. The share repurchase authorization does not have an expiration date and may be amended, suspended, or terminated by our Board of Directors at any time. During the 2024 Fiscal Year, we repurchased 366,443 shares of our common stock at an average price per share of $140.97. As of December 29, 2024, the dollar value of shares that may yet be purchased under the share repurchase authorization was $312.0 million.

Previous wording

Our borrowing base capacity under the ABL Facility was $578.2 million as of December 31, 2023, after giving effect to $7.5 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $14.3 million. Our borrowing base capacity under the ABL Facility was $487.4 million as of January 1, 2023, after giving effect to $100.0 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $11.5 million. As of December 31, 2023, we had total cash and cash equivalents of $82.5 million, total gross long-term debt of $379.0 million, and total finance lease obligations (excluding interest) of $91.6 million.

Current wording

Our borrowing base capacity under the ABL Facility was $581.2 million as of December 29, 2024, after giving effect to outstanding letters of credit of $18.8 million. Our borrowing base capacity under the ABL Facility was $578.2 million as of December 31, 2023, after giving effect to $7.5 million of revolving credit loans under the ABL Facility and outstanding letters of credit of $14.3 million. As of December 29, 2024, we had total cash and cash equivalents of $107.1 million, total gross long-term debt of $393.3 million, and total finance lease obligations (excluding interest) of $130.6 million.

Previous wording

Working capital was $827.0 million as of December 31, 2023, an increase of $67.5 million as compared to $759.5 million as of January 1, 2023. The change in working capital was primarily attributable to an increase in cash and cash equivalents and higher receivables supporting our sales growth.

Current wording

Working capital was $908.8 million as of December 29, 2024, an increase of $81.8 million as compared to $827.0 million as of December 31, 2023. The change in working capital was primarily attributable to an increase in cash and cash equivalents and higher receivables and inventory as a result of acquisitions.

Previous wording

Capital expenditures of $32.1 million for the 2023 Fiscal Year were 0.7% of Net sales for the year. Capital expenditures have averaged $30.6 million annually from the 2021 Fiscal Year to the 2023 Fiscal Year representing an average of 0.8% of Net sales over this time period. We expect capital expenditures to be in a range of 0.8% to 1.4% as a percentage of Net sales for the 2024 Fiscal Year.

Current wording

Capital expenditures of $40.5 million for the 2024 Fiscal Year were 0.9% of Net sales for the year. Capital expenditures have averaged $33.2 million annually from the 2022 Fiscal Year to the 2024 Fiscal Year representing an average of 0.8% of Net sales over this time period. We expect capital expenditures to be in a range of 0.8% to 1.4% as a percentage of Net sales for the 2025 Fiscal Year.

Previous wording

Our gross long-term debt balance increased $22.9 million since January 1, 2023 to $379.0 million. This increase was primarily attributable to higher working capital as described above and our acquisition investments. We have current maturities on our long-term debt of $5.3 million, which includes $3.8 million related to the term loan facility and $1.5 million related to the hybrid debt instruments. The projected interest payments on our debt only pertain to obligations and agreements outstanding as of December 31, 2023 and expected payments for agent administration fees. The projected interest payments are calculated for future periods through maturity dates of our long-term debt using interest rates in effect as of December 31, 2023. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors and events, including our entry into amendments of the term loan facility and the ABL Facility. The total amount of interest on long-term debt increased $14.5 million since January 1, 2023 to $112.4 million, primarily due to the increase in borrowings under the term loans and rising interest rates. Refer to “Note 8. Long-Term Debt” in the notes to the consolidated financial statements for further information regarding our debt instruments.

Current wording

Our gross long-term debt balance increased $14.3 million since December 31, 2023 to $393.3 million. This increase was primarily attributable to borrowings under the term loans, partially offset by repayment of the ABL Facility. We have current maturities on our long-term debt of $4.3 million, which includes $3.9 million related to the term loan facility and $0.4 million related to the hybrid debt instruments. The projected interest payments on our debt only pertain to obligations and agreements outstanding as of December 29, 2024 and expected payments for agent administration fees. The projected interest payments are calculated for future periods through maturity dates of our long-term debt using interest rates in effect as of December 29, 2024. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors and events, including our entry into amendments of the term loan facility and the ABL Facility. The total amount of projected interest payments on long-term debt increased $18.8 million since December 31, 2023 to $131.2 million, primarily due to the extension of the maturity date of the term loan facility as well as the increase in borrowings under the term loans. Refer to “Note 8. Long-Term Debt” in the notes to the consolidated financial statements for further information regarding our debt instruments.

Previous wording

Our purchase obligations include various commitments with vendors to purchase goods and services, primarily inventory. The largest purchase obligations include contracts with various farmers that run through the 2026 Fiscal Year and obligate us to make payments for grass seeds for approximately $76.1 million, which includes expected payments of $44.5 million for the 2024 Fiscal Year. There are also other supplier and service arrangements with vendors totaling $86.3 million, of which $43.3 million of payments are expected to be made in the 2024 Fiscal Year. These purchase obligations are generally cancelable, but we have no intent to cancel and incur a penalty for not meeting the minimum required purchases. We have excluded purchase orders and agreements made in the ordinary course of business that are cancelable without penalty. Any amounts for which we are liable under purchase orders for goods received are reflected in Accounts payable on our Consolidated Balance Sheets and are excluded from the table above. Refer to “Note 10. Commitments and Contingencies” in the notes to the consolidated financial statements for additional information regarding our purchase commitments.

Current wording

Our purchase obligations include various commitments with vendors to purchase goods and services, primarily inventory. The largest purchase obligations include contracts with various farmers that run through the 2027 Fiscal Year and obligate us to make payments for grass seeds for approximately $52.9 million, which includes expected payments of $37.6 million for the 2025 Fiscal Year. There are also other supplier and service arrangements with vendors totaling $87.6 million, of which $46.7 million of payments are expected to be made in the 2025 Fiscal Year. These purchase obligations are generally cancelable, but we have no intent to cancel and incur a penalty for not meeting the minimum required purchases. We have excluded purchase orders and agreements made in the ordinary course of business that are cancelable without penalty. Any amounts for which we are liable under purchase orders for goods received are reflected in Accounts payable on our Consolidated Balance Sheets and are excluded from the table above. Refer to “Note 10. Commitments and Contingencies” in the notes to the consolidated financial statements for additional information regarding our purchase commitments.

Previous wording

Net cash provided by operating activities for the 2023 Fiscal Year was $297.5 million compared to $217.2 million for the 2022 Fiscal Year. The increase reflected improved working capital management due primarily to our progress in reducing inventory levels.

Current wording

Net cash provided by operating activities for the 2024 Fiscal Year was $283.4 million compared to $297.5 million for the 2023 Fiscal Year. The decrease primarily reflects a decline in Net income, partially offset by contributions from working capital management in the 2024 Fiscal Year compared to the 2023 Fiscal Year.

Previous wording

Net cash used in investing activities for the 2023 Fiscal Year was $226.0 million compared to $284.4 million for the 2022 Fiscal Year. The decrease reflects lower acquisition investments in the 2023 Fiscal Year compared to the 2022 Fiscal Year. Capital expenditures of $32.1 million were $5.0 million higher in the 2023 Fiscal Year compared to $27.1 million in the 2022 Fiscal Year due to increased investment in branch improvements including relocations.

Current wording

Net cash used in investing activities for the 2024 Fiscal Year was $177.1 million compared to $226.0 million for the 2023 Fiscal Year. The decrease reflects lower acquisition investments in the 2024 Fiscal Year compared to the 2023 Fiscal Year. Capital expenditures of $40.5 million were $8.4 million higher in the 2024 Fiscal Year compared to $32.1 million in the 2023 Fiscal Year due to increased investment in branch improvements and information technology.

Previous wording

Cash flow (used in) provided by financing activities

Current wording

Cash flow used in financing activities

Previous wording

Net cash used in financing activities was $(18.3) million for the 2023 Fiscal Year compared to net cash provided by financing activities of $43.4 million in the 2022 Fiscal Year. The increase in net cash used in financing activities primarily reflects higher net repayments under the ABL Facility, partially offset by increased borrowings under the term loan facility, as a result of lower investments in working capital and acquisitions during the 2023 Fiscal Year compared to the 2022 Fiscal Year.

Current wording

Net cash used in financing activities was $80.9 million for the 2024 Fiscal Year compared to $18.3 million in the 2023 Fiscal Year. The increase primarily reflects lower net borrowings to fund our acquisition investments and an increase in share repurchases during the 2024 Fiscal Year compared to the 2023 Fiscal Year.

Previous wording

Landscape Holding and Landscape, as borrowers (collectively, the “Borrowers”), entered into the Fifth Amendment to the Amended and Restated Credit Agreement, the (“Fifth Amendment”), dated as of March 23, 2021, with JPMorgan Chase Bank, N.A. (the “New Agent”), as administrative agent and collateral agent, the several banks and other financial institutions party thereto and certain other parties party thereto from time to time. The Fifth Amendment amended and restated the Amended and Restated Credit Agreement, dated as of April 29, 2016, among the Borrowers, the lenders from time to time party thereto and UBS AG, Stamford Branch (the “Existing Agent”) as administrative agent and collateral agent (as amended prior to March 23, 2021, the “Existing Credit Agreement” and, as so amended and restated pursuant to the Fifth Amendment, the “Second Amended and Restated Credit Agreement”) in order to, among other things, incur $325.0 million of term loans (the “New Term Loans”). The New Term Loans mature on March 23, 2028.

Current wording

Landscape Holding and Landscape, as borrowers (collectively, the “Borrowers”), entered into the Fifth Amendment to the Amended and Restated Credit Agreement, the (“Fifth Amendment”), dated as of March 23, 2021, with JPMorgan Chase Bank, N.A. (the “New Agent”), as administrative agent and collateral agent, the several banks and other financial institutions party thereto and certain other parties party thereto from time to time. The Fifth Amendment amended and restated the Amended and Restated Credit Agreement, dated as of April 29, 2016, among the Borrowers, the lenders from time to time party thereto and UBS AG, Stamford Branch (the “Existing Agent”) as administrative agent and collateral agent (as amended prior to March 23, 2021, the “Existing Credit Agreement” and, as so amended and restated pursuant to the Fifth Amendment, the “Second Amended and Restated Credit Agreement”) in order to, among other things, incur $325.0 million of term loans (the “New Term Loans”).

Previous wording

Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the New Term Loans may be increased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) the greater of (a) $275.0 million and (b) 100% of Consolidated EBITDA (as defined in the Second Amended and Restated Credit Agreement) for the trailing 12-month period plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 4.00 to 1.00.

Current wording

Subject to certain conditions, without the consent of the then existing lenders (but subject to the receipt of commitments), the Tranche B Term Loans may be increased (or a new term loan facility, revolving credit facility, or letter of credit facility added) by up to (i) the greater of (a) $392.0 million and (b) 100% of Consolidated EBITDA (as defined in the Second Amendment) for the trailing 12-month period plus (ii) an additional amount that will not cause the net secured leverage ratio after giving effect to the incurrence of such additional amount and any use of proceeds thereof to exceed 4.00 to 1.00.